BTG Reports Record First Quarter Financial Results.

VIENNA, Va.--(BUSINESS WIRE)--July 17, 1996--BTG, Inc. (NASDAQ: BTGI) released its FY 1997 unaudited results today for the quarter ended June 30, 1996.

The information technology company reported record first quarter revenue, net income, and earnings per share. Revenue for the quarter totaled $75.4 million, an increase of 90% over the $39.6 million reported for the first quarter of FY 1996. Net income for the quarter was $757,000, up from $671,000. Earnings per share were $0.12 compared to $0.11 reported for the comparable period last year.

BTG President and CEO Edward H. Bersoff said the increases can be attributed to two primary factors: "The federal government shutdowns last winter created a delayed demand for technology services and products. Despite the negative impact the shutdowns had on our third quarter FY 1996 earnings, we rebounded with a record fourth quarter. This momentum has now carried into the first quarter of our new fiscal year."

Bersoff said the record first quarter revenue also can be attributed to revenue generated by Concept Automation, Inc. (CAI), a value-added reseller and systems integrator acquired by BTG in October 1995. CAI's revenue was primarily generated from contracts with civilian federal agencies, state and local governments, and commercial clients.

BTG's operating income increased 29%, from $1.7 million in the FY 96 first quarter to $2.2 million this year. Bersoff attributed the increase to lower selling, general and administrative expenses as a percentage of revenue. This was achieved in part through the consolidation of acquired assets into a combined, more efficient value-added reselling facility and operation. In addition, he said, gross margins continue to be among the highest in the industry because the company sells sophisticated technology products that are more profitable than standard commodity items.

Bersoff said the company expects that the momentum begun in the first quarter will continue to build. "The government fiscal year ends September 30, so federal purchasing of information technology products generally peaks during August, September, and October. As a result, BTG's second and third quarters are traditionally our highest revenue periods. In addition, our contract and bid backlogs, key indicators of the future, continue to grow to record levels. Contract backlog was $847 million at the end of June; bid and proposal activity reached nearly $2 billion, the highest level in our history."

In addition, Bersoff said the company's engineering, systems integration, and product units reported significant new business activity during the first quarter. These included:

-- BTG's selection by the U.S. Department of Transportation as one of the prime contractors on the $1.1 billion Information Technology Omnibus Procurement (ITOP) program. BTG's team is one of nine industry teams awarded contracts for the information systems engineering area of ITOP.

-- The award of the U.S. Navy's contract for New Technologies for Office and Portable Systems (NTOPS). CAI, which bid on the contract prior to BTG's acquisition of the company, is one of two firms selected for the award. NTOPS has a total contract capacity of $176 million over two years.

-- A contract with the Tri-Service Technology Center in Vicksburg, Miss., for work on the Architectural/Engineering/Construction Computer-Aided Design and Drafting program. This program has total contract capacity of $7 million over a five-year period.

-- The award to BTG of four 1996 GSA Schedules, which are the government's preferred purchasing contracts. BTG is one of the ten largest GSA Schedule holders.

-- The sale of over $5 million in Internet-related products and services, including Netscape software products and consulting services. BTG is the reseller of Netscape Navigator and server products to the federal market.

-- BTG's investment in WheelGroup Corporation, a leader in technology that protects information from fraud and misuse on unsecure networks such as the Internet, intranets, and wide area networks.

-- Contracts for the development of Web sites for an expanding base of clients, including a new site for the U.S. Conference of Mayors and additional development work for Spencer Gifts, the World Bank's IPAnet, and the Educational Testing Service.

BTG provides information technology services and products to government and commercial clients. The company specializes in systems engineering, integration and network systems, Internet/intranet access and services, custom computer manufacturing, and the value-added reselling of hardware, software and services. The company has more than 900 employees and offices in ten states and in Europe. Additional information on BTG is available on the Internet at http://www.btg.com/, by e-mail at [e-mail], or by calling 703/556-6518. Investors contact: John Graham, 703/761-6675, or by e-mail: [e-mail]. Editors contact: Theda Parrish, 703/761-6581 (office), 703/573-8135 (home), or by e-mail: [e-mail]. -0-

                  BTG, Inc. and Subsidiaries
             Consolidated Statements of Operations
           (In thousands, except Earnings Per Share)

    Unaudited Results for Quarters Ended 6/30/96 and 6/30/95
                     Other Results Audited

                          Quarter     Quarter      Year       Year
                           Ended       Ended       Ended      Ended
                          6/30/96     6/30/95     3/31/96    3/31/95

Revenue                 $   75,442  $   39,589  $  213,558  $ 155,989

Costs
 Direct Costs               58,727      28,633     163,647    118,631
 Operating Expenses,
  Amortization and
  Other, Net                14,519       9,238      42,422     30,458

Operating Income        $    2,196  $    1,718  $    7,489  $   6,900
Interest Expense            (1,266)       (553)     (3,045)    (1,362)
Equity in Earnings of
 Affiliate                     397          --         792         --
Income Before Income
 Taxes                       1,327       1,165       5,236      5,538
  Provision for income
   taxes                      (570)       (494)     (2,282)    (2,406)
Net Income              $      757  $      671  $    2,954  $   3,132
Earnings Per Share      $     0.12  $     0.11  $     0.47  $    0.60
Weighted average common
 shares outstanding          6,336       6,191       6,233      5,196

CONTACT: BTG, Inc.

John Graham, 703/761-6675 (Investors)

[e-mail]

Theda Parrish, 703/761-6581 (office) (Editors)

703/573-8135 (home) or e-mail: [e-mail]

http://www.btg.com/